The Demographic Cliff

Jonathan V. Last

December 20, 2012 7:07 AM

The New York Times has finally discovered that fiscal cliffs aren’t the only thing that menace the modern nation-state. There’s a demographic cliff, too. A couple weeks ago, the Times’s Ross Douthat wrote a column about America’s bleak demographic future and suggested that the reason we aren’t having enough babies is that we’ve become a decadent society. Douthat’s column touched off something of a firestorm on the left as liberal writers flipped out over the ideas that (1) There aren’t enough babies; (2) More babies would be a good thing; and (3) The dearth of babies suggests there might be something wrong with America’s present cultural moment.

Well last weekend the Times carried an even bigger piece on demographics from Alexandra Harney, looking at how much worse the situation is in Japan. Some highlights:

The first grade class at the elementary school in Nanmoku, about 85 miles from Tokyo, has just a single student this year. The local school system that five decades ago taught 1,250 elementary school children is now educating just 37. Many of the town’s elegant wooden homes are abandoned. Where generations of cedar loggers, sweet potato farmers and factory workers once made their lives, monkeys now reside. The only sounds at night are the cries of deer and the wail of an occasional ambulance.

Nanmoku’s plight is Japan’s fate. Faced with an aging society, a depopulating countryside and economic stagnation, the country has struggled for decades to address its challenges. . . .

Nowhere is the rapid aging of Japan more visible than in rural towns like Nanmoku, where 56 percent of local residents are over 65. Over the next 25 years, the proportion of Japan’s population that is elderly will rise from almost one in four to one in three.

Yowza. But the truth is, things are even worse than Harney lets on. If Japan’s fertility rate were to somehow rebound to replacement level, its demographic structure is already so dilapidated that the country would lose 30 percent of its population by 2100. If Japan’s fertility rate stays where it is now? Then by 2100 the country will have lost more than half of its current population.

Population contractions are bad news. They bring with them economic distress and social instability. And sometimes worse. So no matter what happens, Japan is in for a rough ride over the next four generations. It’s entirely possible that “Japan” as we know it today won’t exist by the end of the century.

It’s to the New York Times’s credit that they recognize the demographic danger Japan—and by extension the rest of the world—faces. (Japan is the leading edge, but most countries are on the same curve and the world is headed toward global population contraction right now.) This is news that many of the people who read the New York Times don’t want to hear.

But Harney concludes by offering Times readers false comfort. Like many liberals, Harney seems to believe that demographic problems can be conquered with further expansion of the state. Here she is explaining how Japan could get out of the fix it’s in:

Japan could address its baby shortage by taking three basic steps that have been discussed for years but have never enjoyed sufficient political leadership to be enacted. First, the government must create more subsidized public day care centers, which would make child care more affordable for more people.

Second, companies must dismantle old systems that promote employees on seniority, rather than skills. These antiquated practices hold down young workers’ salaries and keep the labor market too rigid. And companies should discourage overtime work so that employees have more time with their families.

Third, both the government and companies should encourage more women to enter the labor force with high-quality jobs on a par with men and offer incentives to women to return to work after childbirth. In places where these sorts of reforms have taken hold, from France to Sweden, the result has been a boost to the birthrate and the economy.

I don’t mean to be a wet blanket, but there’s been a great deal of research done on exactly the policies Harney proposes and the results are, at best, mixed.

For starters, Harney says that in places where her proposed reforms have been enacted—“from France to Sweden”—there’s been success. It’s worth unpacking that claim.

For one thing, it really is only “from France to Sweden”—aggressive state pro-natalist policies have shown little effect outside the narrow geographic corridor from France to the Nordic countries. In many other places and times—from Soviet Russia to modern Singapore—governments have tried all sorts of policy innovations to encourage family formation and childbearing. There have been tax breaks for parents, years-long paid maternity leave, the awarding of big cash “baby bonuses”—even attempts to subsidize the housing of grandparents so that they could take care of the kids in order for mothers to return to work. The places where the policies have been most successful are France and the Nordic countries. So the successes have been geographically and culturally localized while the instances of failure have spanned the globe.

And how successful have these policies been in France and the Nordic states? Well, the replacement fertility rate is 2.1, which is the number of children born, per lifetime, to the average woman. In Sweden the fertility rate today is 1.67. In Switzerland it’s 1.53. In Norway it’s 1.77. In the Netherlands it’s 1.78. In Finland it’s 1.73. Only France is in spitting distance of replacement, with a total fertility rate (TFR) of 2.08. In other words, the “successes” Harney points to aren’t just localized—they’re not even all that successful.

With the exception of France, of course. France has been obsessing about its fertility rate and pursuing pro-natalist policies since 1938. However, it’s pretty clear that the single most successful aspect of France’s pro-natalism hasn’t been free daycare for working mothers and encouragement of women in the workforce. It’s immigration. Native-born French women have a fertility rate of 1.7—just about what you see in the Nordic countries. France’s big fertility boost comes from its large immigrant population, whose fertility rate is a gaudy 2.8. And that mass of immigration—mostly from cultures that are quite different from the French ideal of liberté, égalité, fraternité—has brought its own set of challenges. (For a full discussion of this subject, see Christopher Caldwell’s definitive book, Reflections on the Revolution in Europe: Immigration, Islam and the West.)

So why does Harney claim that it’s so important to get women into the workforce in order to boost fertility? I suspect she’s leaning on a study by Karin Brewster and Ronald Rindfuss. In 2000 the pair of researchers looked at women’s labor participation rates of northern European countries (France and the Nordic states) versus southern European countries (Greece, Italy, Spain, etc.). They found that, counter to what you might think, fertility rates do not necessarily decline as women’s labor participation rates increase. In northern Europe, women work outside the home at greater rates than do women in southern Europe, yet their fertility rates are higher.

But Harney is extrapolating a bit further from what Brewster-Rindfuss actually proved. The lesson from their research isn’t that “more working women leads to higher fertility.” Rather, it’s that “more working women need not cause lower fertility.”

In 2008, Jan Hoem undertook the broader question Harney is getting at when he surveyed the literature on the effects of state spending on fertility rates. What Hoem found was that the correlation between government spending on natalism and actual fertility is, in most cases, at the margins. A similar study done by A.H. Gauthier and J. Hatzius in 1997 found that in Europe every 25 percent increase in benefits resulted in a 0.6 percent increase in fertility in the short term and 4 percent increase in the long term. (That paper, “Family Benefits and Fertility: An Econometric Analysis,” was featured in the journal Population Studies and isn’t available for free online, I’m afraid.)

As Hoem concludes, fertility is “best seen as a systemic outcome that depends more on broader attributes, such as the degree of family-friendliness of a society, and less on the presence and detailed construction of monetary benefits.”

This isn’t to say that countries shouldn’t try to reverse their fertility declines—they probably should. And in a world where money is no object, it probably wouldn’t hurt Japan (or any other industrialized country) to extend its state-sponsored daycare regime.

But when people hold up France and Sweden and national daycare as amulets against our demographic decline, they should understand that in all likelihood such programs have little more than token effects.